CARIAD's work, if it goes well, will significantly increase the level of digitalization and intelligence of Volkswagen Group's electric vehicles, thereby making them more popular with Chinese consumers and helping the group maintain its market share in China.
At the beginning of 2021, when volkswagen ID. electric vehicles were launched in China, many people did not have confidence in its competitiveness and market prospects, even some people in Volkswagen China thought so. Later sales figures proved their concerns. The main problem with the ID.series of electric vehicles is that they are not smart enough compared to the products of Tesla and Chinese start-up electric vehicle companies represented by "Wei Xiaoli".
After realizing the problem, the Volkswagen Group began to strengthen software research and development and upgraded its software division to the software company CARIAD. To a large extent, the performance of the software company will determine the success or failure of volkswagen group transformation in the Chinese market.
The predecessor of CARIAD is the Car.Software Organisation, Volkswagen's software division established in 2020. Currently, CARIAD has around 5,000 engineers and developers worldwide, and Volkswagen Group CEO Herbert Diess is directly responsible for managing CARIAD.
THE LONG-TERM GOAL OF CARIAD IS TO DEVELOP A NEW, UNIFIED SOFTWARE PLATFORM FOR ALL BRANDS OF THE VOLKSWAGEN GROUP IN THE FUTURE, SUPPORTING VOLKSWAGEN'S SELF-DEVELOPED OPERATING SYSTEM VW. OS, and connect to the Volkswagen Cloud VW.AC. The Group's goal is to have the technology stack developed by CARIAD running on more than 40 million Group vehicles worldwide by 2030 and to achieve the great synergies and economies of scale expected in the Group's 2030 NEW AUTO strategy.
CARIAD's work, if it goes well, will significantly increase the level of digitalization and intelligence of Volkswagen Group's electric vehicles, thereby making them more popular with Chinese consumers and helping the group maintain its market share in China.
In 2021, the market share of volkswagen groups and Volkswagen brands in China will be 16% and 11%, respectively, compared with 20% and 13% in 2018. The decline in the group's market share in China has various factors, such as the rise of Chinese brand cars again in the past few years, the relative decline in the market share of foreign brands; the overall proportion of new energy vehicles in the Chinese auto market has been rising, but volkswagen group's new energy vehicle sales have not increased at the same time; and the group's chip shortage and the impact of epidemic control on production seems to be greater than other Chinese brands.
Among the above factors, volkswagen group's new energy vehicle business outperforming the Chinese market is particularly noteworthy. Because China's new energy vehicle market has entered a period of rapid growth, the replacement of traditional fuel vehicles has been irreversible. Moreover, new energy vehicles are the carriers that carry the transformation of car companies to electrification, especially intelligence. If Volkswagen Group fails to expand its share of new energy vehicles in China, it will also lead to a continuous decline in its market share in the entire Chinese auto market.
The Volkswagen Group's goal is to give its new energy vehicles the same high market share as fuel vehicles in the Chinese market. But that goal is still far from here.
Source: Compulsory Traffic Insurance
According to statistics from the China Association of Automobile Manufacturers, sales of new energy vehicles in China in 2021 will be 3.521 million units, with a penetration rate of 13.4%. Among them, pure electric vehicle sales were 2.73 million. Volkswagen Group's sales of 92,700 pure electric vehicles last year corresponded to a market share of 3.4% (Volkswagen's plug-in hybrid model market share is higher), of which the ID. series of electric vehicles delivered 70,000 units, failing to meet the target of 80,000-100,000 units set at the beginning of the year.
In contrast, Tesla will sell more than 480,000 electric vehicles in China in 2021, accounting for more than half of its global sales.
As mentioned above, the ID. series of electric vehicles lags behind Tesla and many Chinese start-up brands in terms of intelligence. At the beginning of the listing, its car machine appeared to crash and black screen; software upgrades could not be achieved through OTAs, users still needed to drive the vehicle back to the dealership; its voice control function and assisted driving function did not have highlights. These shortcomings affect consumer choices.
CARIAD will be key to addressing these issues. Its long-term goal is to develop a new, unified software platform that will be suitable for all brands of the Volkswagen Group in the future, supporting Volkswagen's self-developed operating system VW. OS, and connect to the Volkswagen Cloud VW.AC. This technology stack will be launched around 2025 and pre-equipped with L4 level autonomous driving technology.
Prior to that, the first to be launched will be a production software platform for MEB platform models, which will enable remote online updates (OTAs) of software on specific models. Then in the next two years, a high-end software platform for the PPE platform will be launched, which will support advanced infotainment systems based on the Android open source system as well as advanced driver assistance systems, and support remote online updates on some Audi and Porsche brand models.
In order to meet the needs of users in China, Volkswagen's largest single market in the world, and at the same time feed the global market, CARIAD has also established a Chinese subsidiary, which is CARIAD's first subsidiary outside Europe.
On April 28, CARIAD unveiled its China strategy. Its China team will drive the development of software products for Chinese consumers, including advanced driver assistance systems and autonomous driving, next-generation intelligent connected features, intelligent cockpit and body design, big data and software operating systems.
CARIAD's China subsidiary will work with its European headquarters to develop the above-mentioned unified and scalable software platform for all Volkswagen Group brands.
The Chinese team will lead and participate in 70% of the R&D work involving the new software platform technology stack and product line, including local R&D and adaptation. At the same time, the Chinese team will also develop a data backend that meets the data compliance requirements, that is, the Volkswagen Cloud VW.AC, and implement a series of intelligent interconnection services. The China team will also lead the implementation of the ID. family series of OTAs in China (the first update is expected to be achieved in the second half of 2022).
The Chinese team is also leading the development of advanced infotainment systems on high-end software platforms as well as China-specific applications of advanced driver assistance systems.
CARIAD currently employs more than 600 people in China and is expected to double by the end of 2023, with more than 90 percent of them being local software talent. At the same time, the company is building R&D capabilities in Beijing, Shanghai, Chengdu and Hefei to build a nationwide distributed R&D network.
Evergreen, CEO of CARIAD's China subsidiary
Changqing, CEO of CARIAD's China subsidiary, is one of cariad's co-founders and has been with the Volkswagen Group's headquarters in Germany for 30 years. From 2018 to 2020, Evergreen was responsible for planning and establishing the Group's unified product range that can expand the electrical and electronic architecture, and promoting the transformation of the Volkswagen Group into a software-driven mobility service provider. As one of the co-founders of CARIAD, Evergreen will be responsible for product and project management at CARIAD's Headquarters in Germany from 2020 to 2021.
Notably, Sun Wei, CTO of CARIAD's China subsidiary, said: "We want to create impressive and attractive features. The innovation of in-vehicle software should not repeat the application of mobile phones, but should truly originate from the ability ecology of the car itself. By incorporating the car's unique experience, functionality and scalability into innovation, we will make truly 'car-native' applications. ”
He gave a few examples. For example, how an application called "OOTD (Outfit of the Day)" leads to an innovative user experience. When you're sitting in the car, an overhead AI camera senses the color/style of the clothes you're wearing and automatically configures digital elements such as infotainment system desktop themes, ambient light band colors, greetings, and music to create an all-in-one "wear" smart cockpit experience.
There are also several applications based on V2X technology. For example, the "Traffic Signal Information (TLI)" function will provide drivers with traffic light information accurate to the second on their driving road, and give suggestions based on the traffic light information at the intersection in front of them to ensure the green wave of vehicles, improve travel efficiency and environmental economy. This technology has been deployed in the latest Audi models in the Chinese market. In many cities in China, owners of some Audi models have or will have access to all traffic light information in the city.
The "Accident Warning" function allows vehicles with this function to send relevant warnings to surrounding vehicles in real time through the C-V2X protocol to broadcast in real time when they encounter traffic accidents, and prompt vehicles behind them beyond the visual distance to prevent rear-end collisions.
The Hazard Information Alert (LHI) function provides customers with more specific and timely information on the dangers of the surrounding roads. Through the cloud control platform, traffic hazard information can be instantly captured by all vehicles equipped with this function on the road and distributed to the display instrument of the relevant vehicle in an orderly manner, so that customers can know in advance of real-time dangerous traffic events up to 40 kilometers.
In the development of all innovative technologies and applications, efficiency and speed are key. "Based on local customer experience and expectations, we will develop, iterate and continuously improve our products at a Chinese pace," Chang Qing said.